American workers will be able to put more money into workplace retirement plans in 2027, after the Internal Revenue Service raised the annual employee contribution limit for 401(k) accounts to 25,500 dollars. The new 401(k) limits were announced on Thursday in news release IR-2026-136, with the full figures set out in Notice 2026-66. The limit rises by 1,000 dollars from 24,500 dollars in 2026.
The higher 401(k) limits also apply to 403(b) plans, governmental 457 plans and the federal Thrift Savings Plan. The changes apply to contributions for the 2027 tax year and do not change the limits for 2026. Frank J. Bisignano, the chief executive of the IRS, said the figures give employers the information they need to make retirement planning decisions for the year ahead.
What the new 401(k) limits allow
Workers aged 50 and older will be able to make an extra catch-up contribution of 8,500 dollars in 2027 under the new 401(k) limits, up from 8,000 dollars in 2026. That takes their total annual contribution limit to 34,000 dollars. Workers aged 60 to 63 can save more again. Their catch-up contribution rises to 11,750 dollars from 11,250 dollars, which takes their total to 37,250 dollars.
The total annual additions cap, which covers employee contributions plus employer matching and profit-sharing payments, rises to 75,000 dollars from 72,000 dollars.
How the 401(k) limits are set
The limits are cost-of-living adjustments tied to inflation. Workplace limits move with third-quarter inflation, which was 3.7 percent this year, and they are rounded down to the nearest 500 dollars. The higher catch-up limit for workers aged 60 to 63 comes from changes enacted under SECURE 2.0, the retirement law that also created the Saver’s Match. The 2027 figures were published in Notice 2026-66, the agency’s technical notice, which also carries the 2027 limits for Roth IRAs, SIMPLE retirement accounts and the Saver’s Credit. The notice is published on the IRS website, where savers can read the full table of 2027 limits.
IRA limits stay flat as 401(k) limits rise
Savers who use individual retirement accounts will not get a higher contribution allowance. The annual IRA contribution limit stays at 7,500 dollars for 2027, and the catch-up amount for savers aged 50 and older stays at 1,100 dollars. The IRA limit was the only major limit that did not move.
The IRS also raised the income ranges that decide who can contribute to a Roth IRA and who can deduct traditional IRA contributions. The new 401(k) limits and the Roth income ranges are set out in the agency’s technical notice. Limits for SIMPLE retirement accounts also rise, and the notice covers the Saver’s Credit and the new Saver’s Match.
A second change starts in 2027. From 2027, the new federal Saver’s Match replaces the Saver’s Credit for retirement contributions. The programme pays up to 1,000 dollars a year to eligible lower- and moderate-income savers. The credit itself survives only for contributions to ABLE accounts. The Saver’s Credit income cap for ABLE contributions made after December 31, 2026 is 83,000 dollars for married couples who file jointly, 62,250 dollars for heads of household and 41,500 dollars for single filers and married people who file separately.
What savers should do before 2027
The 401(k) limits announcement came a week after the IRS published 2027 inflation adjustments for almost 70 other tax provisions, including federal income tax brackets, higher capital gains brackets and estate and gift tax exemptions. Workers who want to use the higher limits should check their plan during open enrolment and change their contribution rate before 2027 starts. Social Security benefits will also rise 3.6 percent from January, the largest increase since 2023.
The 401(k) limits for 2027 give workers more room to save, but the higher ceilings only help people who can afford to raise their contributions. The IRS said full details of all 2027 retirement-related cost-of-living adjustments are in Notice 2026-66.